“I’ve put 10 hard years of work into that company, I can’t just go work somewhere else.”
“I studied management for two years to get to this position. What was the point of all that effort if I change careers now?”
“I already spent $30,000 and five years on an undergrad in arts. I can’t just change my decision now. It’s too late.”
What do all these statements have in common? They are examples of decisions influenced by the sunk cost fallacy.
There are many reasons a client might feel compelled to stay in or continue to pursue a career path they are dissatisfied with. This may include financial pressure, health-related issues, family needs or imposed expectations, to name a few. In this article, I want to draw attention to the sunk cost fallacy. This article will give a brief overview of this phenomenon, why it matters for career professionals and how to support a client who may feel stuck.
What is the impact of the sunk cost fallacy?
Originally from the world of business but now used in a broader scope, a sunk cost refers to an irreversible investment involving one or all the following: the time, energy and/or money someone has put toward something. Sunk cost fallacy refers to both a belief and tendency that one must continue a path they are on but may no longer want, or that may no longer be rational, because of the investment they have already made.
Your client may feel it is easier and more comfortable to continue what they are doing than to face all the other potential anxieties, challenges and difficult emotions associated with loss and letting go. This can lead to increased job dissatisfaction, which affects an individual’s quality of life.
If you and your client become aware that this fallacy is negatively influencing your client’s career path, you can work together to create an action plan. By addressing the sunk cost fallacy, you can support your clients to make way for healthier decisions that are not driven by feeling trapped and indebted to past investments, but focus on future gains and opportunities.
6 approaches to help your client work through the sunk cost fallacy
1. Recognizing and identifying the sunk cost fallacy
Just talking about what the sunk cost fallacy is and how it may be affecting your client’s career situation can be useful. This can help you clarify whether the sunk cost fallacy is affecting the client’s career decision and/or if other underlying factors are creating barriers.
2. Challenging the fallacy
A belief (e.g. “It’s too late for me to change careers”) is an acceptance that a statement is true – not that it necessarily is true. To challenge the belief, you can:
- Explore the current belief
- Where did the belief come from?
- What are some negative impacts of this belief?
- What might happen if you continue to see this belief as true?
- Try an enabling belief
- What might be a different belief?
- If this new belief were true, what might be possible?
- What evidence might there be to support this new belief?
There are plenty of structured worksheets you can use in lieu of informal questions.
3. Career development planning
It can be less scary and easier to challenge the sunk cost fallacy knowing there are other options and with a new goal in mind. Your client may or may not know what different career they want. You can assess where the client is and work through various stages of career development planning including exploring themselves, exploring alternate options and opportunities, making decisions and taking action.
4. Letting go
The biggest obstacle in challenging this fallacy is often being able to let go and accept the irreversible loss. Learning about loss aversion can help increase your understanding of why the client might be struggling. A good starting place is to do a “loss inventory” with your client to identify their sunk costs.
A client may feel a range of emotions including guilt, grief, fear, anxiety and sadness. Decisions driven solely by emotion can lead to undesirable action and consequences, so it is important to process them. You can help your client by creating a safe place for them to explore some of the emotions and thought patterns that may come up for them.
5. Focus on gains
Your client likely did not gain absolutely nothing from their investments. Cognitive behavioural therapy (CBT) techniques such as reframing, shifting perspective and cognitive reappraisal can help clients identify different ways of thinking about their potential losses. As with loss, you can help the client create a “gains inventory” of the benefits they have accrued from their career investments.
Also, whether or not your client knows what they want to do next, you can still explore the potential benefits of discontinuing their current course of action:
- Help the client identify benefits such as learning, making connections, positive memories, the experience itself
- Look at the long-term trajectory. If the client stopped what they have been doing to invest in something they want to do, where would this take them in one year? Five years? Ten years?
6. Assessing the pros and cons for change
Understanding the potential pros and cons of making a change is essential for the client to work through. The Force Field Analysis – often used as a change management model in large organizational structures – can also be used to help your client calculate and assess the pros and cons.
There are many reasons a client may choose to stay in their situation or continue to pursue a path even if they are unhappy with it. If, however, this decision is rooted in sunk cost fallacy, I hope this article has provided you with some helpful approaches to help your client work through this and make a career decision in alignment with their values, interests, passions and skillset.